Free Ke$ha And Usher Downloads Now Available At … Your Public Library

The number of people downloading free music files from their local library is set to increase dramatically this year-and that’s not because people are using library computers to illegally share music via peer-to-peer networks. It’s because of a service called Freegal that’s stayed surprisingly under the radar even as it’s reaching some of the nation’s biggest cities. Last year, Freegal struck a deal with Sony (NYSE: SNE) Music Entertainment to offer the company’s extensive music catalog to libraries. And even though state and local budgets are crimped, more libraries are paying for Freegal’s service.

Last month, Freegal added Seattle and New York City to its growing client list; and the two biggest cities in Nevada, Las Vegas and Henderson, each launched their MP3 download services on Monday.

Freegal isn’t the only music company serving libraries, but its co-founder and president, Brian Downing, says his service is the first to offer library patrons access to a large, major-label music catalog-the Sony collection he’s offering includes more than 400,000 songs across all genres. (Other Sony acts include Shakira, the Kings of Leon and Christina Aguilera.) Freegal is also the first library music service to offer the music as MP3’s that don’t have DRM copy-protection schemes, which means users can listen to them on multiple devices and even make their own CDs. (OverDrive, for example, is an Ohio company that works with libraries to give out “loaner” music files, but they’re copy protected and expire after a fixed time period.) At libraries using Freegal, unlike with books, users can “check out” the MP3s and don’t need to worry about bringing them back.

Since launching in May, Downing has struck deals with 310 libraries that range from $1,000 to “six figures.” The New York Public Library launch last month represents Freegal’s biggest client so far. Other big metro areas with city or county libraries using the service include Seattle, Minneapolis, Portland, Nashville, Las Vegas, San Jose, Salt Lake City, Denver, and Orlando.

Downing declined to provide additional pricing details. But some libraries using Freegal have reported being on a pay-per-download system, while others have switched to a fixed-fee arrangement. Under the fixed-fee arrangements, the library pays Freegal a flat fee and then offers all its patrons the ability to download a certain number of tracks per week. Many libraries are currently offering members three tracks per week. All of the libraries using Freegal offer the tracks only to locals who have proof of address and are able to legally acquire a library card.

Asked whether the Freegal would be trying to strike deals with other labels, Downing said: “This was not an inexpensive arrangement, as you might suspect. … For right now we’re going to stand pat with what we have.”

The Baldwin Public Library, which serves a few suburban Michigan communities with a total of about 30,000 residents, recently told Patch.com it will pay $17,500 for an unlimited license that offers members three downloads a week.

Some of the libraries that have adopted the service are seeing solid demand despite limited advertising. The Baldwin library initially capped the number of downloads at 50 per week, but after demand quickly outpaced supply, the library upped the cap to unlimited. In Princeton, New Jersey, the library reported that it has had about 7,000 downloads since launching the service in May.

So why is Freegal only taking off now? MP3 players have been around for more than a decade, and iTunes recently passed its one-billion download mark. “Historically, music hasn’t been that big at libraries,” said Downing. Many libraries that tried to loan out CDs had bad experiences doing so. “Those CDs got lost, damaged, stolen… So libraries really didn’t spend much money on music. Less than 50% of libraries carry popular CDs at all, because they walk out the door.”